Buying a second home can be an exciting and rewarding experience. Whether you are looking for a weekend retreat or somewhere to escape to on holiday, a second home can undoubtedly improve your lifestyle. Before taking the plunge, however, it’s important to consider all the implications that come with buying a second home.
Can you really afford it?
As always when thinking about purchasing property, affordability is a key consideration. Remember that a mortgage on a second home will require a larger deposit. While a deposit on a first home is 10 per cent, regulations put in place by the Central Bank of Malta require a deposit of 25 per cent if you are buying a second home while still holding your first mortgage.
Additionally, the term of the home loan will likely be shorter for a second home than for a first one, This is because the maximum term of a home loan for a first home is 40 years while for a second home it is 25 years. It’s also important to note that for both first and second homes, your mortgage must mature by the time you reach 65 years of age. As a result of these factors, your monthly mortgage repayments on a second home could be higher depending, of course, on the amount you intend to borrow.
Therefore, when planning the purchase of a second home, make sure you create a budget which not only incorporates the higher deposit but also the monthly payments you will need to make to cover your mortgage.
Ongoing costs
When planning your budget you also need to keep in mind that there’s always going to be additional and ongoing costs on top of your deposit and loan repayments. These include, among others, notarial and architects’ fees while purchasing the property as well as utilities, insurance and maintenance once you become the owner.
Being clear about the costs associated with buying a second home is crucial to helping you identify both the locations and the type of properties that are within your budget. After all, if you are looking for that peaceful getaway, you don’t want to find yourself restricted to looking for a property in a busy area. This may sound obvious, but your budget may only allow you to purchase properties in specific locations so make sure those locations tally with your objectives. Also keep in mind that some locations change with the seasons so what may seem like a quiet retreat at one time of the year might be teeming with visitors at another. The location of your property could also impact its future resale value.
Buying a second home is a substantial investment that requires thorough research and consideration. By addressing these key factors, you can make an informed decision that aligns with your lifestyle aspirations. Whether it’s a vacation retreat or a future retirement haven, careful planning and due diligence will contribute to a successful and fulfilling second home ownership experience.
If you would like advice on purchasing a second home, feel free to contact MeDirect’s home loans experts through our website here.
MeDirect Bank (Malta) plc, company registration number C34125, is licensed by the Malta Financial Services Authority as a Credit Institution under the Banking Act 1994. Applications are subject to the Bank’s lending criteria. Terms and conditions apply and are available on request.
